A few facts about credit card debt may help you to think twice before swiping that card or paying for something you know you cannot afford because it is on credit. The average card has about $1000 on it, making just the 2% minimum payments most people make it will take about 22 years to pay that off with an additional $2300 tacked on for interest. That means you will pay $3300 just to pay off that original $1000 purchase.
A typical American family is currently about $8,400 in debt. Even an entire lifetime of minimum monthly payments of two percent will not be enough time to pay off that amount of debt once you tack on the interest charges that will be accrued. You should keep these statistics in mind before you rush to slide your charge card at the store.
You will be in a better position to prevent yourself from getting overwhelmed with credit card debt if you know the facts about how credit card debt happens to people. Unfortunately, it is all too easy to get stuck in debt. For that reason, it is extremely important to try to use the facts about credit cards to help you manage impulsive spending tendencies.
Another fact about credit card debt is that you should pay more than your minimum monthly payment if you plan on really staying out of dangerously high levels of credit card debt. Only make purchases that you know you will be able to pay for in their entirety within a couple of months.
Credit card debt becomes especially serious when you realize that many Americans are in the habit of spending more money with their credit cards than they earn in an entire year.
By investing just a little bit time in learning the preventative steps that you should take to keep yourself debt free, you will save yourself from experiencing many of the problems associated with credit card debt and enable yourself to make wise choices financially.
Almost everyone who has a reasonably good credit score is sure to be bombarded with credit card debt consolidation junk mail from all kinds of institutions offering to help in the debt consolidation process. Some of these junk main advertisements may even carry the name of a well known company, like GE Capital, for example. But this does not always mean that that company is affiliated with the one that is offering to consolidate your debts for you.
They could have been spun off years ago and are their own organization. That also does not mean that they can not lend a helping hand when it comes to consolidating credit card debt, they can, but you have to be careful that in the process of consolidating credit card debt you do not dig your financial hole deeper than it already is.
There is a danger to consolidating credit card debt because many companies make it seem so easy. Always remember that if it is too good to be true then it probably is.
Advertisements often include check-like documents that claim to just give you a relatively large amount of money that you can invest in your debt elimination plan. That sounds great, but that large amount of money comes from an equity line of credit that the company offers you as long as you are willing to put your home up as collateral. Using such equity credit lines in an effort to consolidate credit card debt is not wise.
Lines of credit are used for major expenses like college for you children or remodeling your home. Plus they are tied to your home's mortgage and you do not want short term debt like credit cards to turn into a long term obligation. You can just throw those offers in the garbage.
Refinancing Options
You can also consolidate your credit card debt by refinancing if you are a homeowner. This is not the best option either, but it certainly can work if you find yourself in a financial bind. Refinancing your home means extending your mortgage back out to thirty years, but this time for a smaller amount. Your loan would be for the amount you still have yet to pay on your mortgage plus the amount of money you need to consolidate your credit card debt.
Even though this method of credit card debt consolidation means that you get stuck with a thirty year loan, your payments will surely be lower than they used to be and your credit card debt will finally have been eliminated.
Both William Blake & Michael Geoffrey are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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